UK and EU expected to announce Brexit trade deal today

LONDON — The Irish foreign minister said a post-Brexit trade deal is expected Thursday, after a “last-minute hitch” delayed an announcement.

Simon Coveney told RTE radio it will be an “enormous relief” when the deal is finally announced.

The timing of an announcement remains unclear, however, with Reuters at midday London time citing an EU and a U.K. official saying the deal could still be “hours away.” Press conferences slated for early Thursday were delayed asboth sides finalized the “small text” of an agreement on fishing rights, Coveney said.

The British currency continued its move higher Thursday to trade close to levels not seen for 31 months. Sterling rose 0.8% to around $1.3593, after earlier reaching a session high of $1.3616.

The FTSE 100 rose 0.5% when markets opened, but slipped into the red as the morning progressed.

Officials on both sides said Wednesday they were optimistic about the chances of a deal, but that issues remained. It came after EU chief Brexit negotiator Michel Barnier said Tuesday that the bloc was making a “final push” to strike a Brexit trade deal with Britain ahead of Dec. 31.

“We are really in a crucial moment,” Barnier told reporters on his way to brief 27 ambassadors. “We are giving it a final push.”

Yields on U.K. and U.S. government bonds dipped on Thursday after rising sharply the day before on hopes of a deal. Bond yields move inversely to prices.

Stumbling blocks

Some 47 years after joining the European Union, Britain officially left the bloc on Jan. 31, 2020. In doing so, it became the first ever nation to leave the EU.

Leaders were given 11 months to agree on the rules that will dictate life for the U.K. and Europe after Brexit, with a deadline for a trade agreement set for Dec. 31.

If Britain and the EU fail to agree on a deal by that date, then both sides could impose border checks and import taxes on each other’s goods, as trade will revert to World Trade Organization terms. This could lead to higher costs for businesses on both sides of the English Channel.

A fish merchant sips coffee in the early morning at the Newlyn Fish Market on December 22, 2020 in Newlyn, England. Fishers there are preparing for new rules on the export of their fish to the EU.

Hugh Hastings | Getty Images | Getty Images

Several stumbling blocks have delayed talks since March, including major disagreements over fishing and competition rules.

Fishing rights appear to be the major issue still to be overcome Thursday.

The EU wants to maintain access for its fishing fleets to U.K. waters, while the U.K. wants to largely curb these fishing rights. A no-deal scenario could see EU access to U.K. waters end abruptly, and vice versa, and the U.K. has already threatened to deploy gunboats to protect British waters.

There are concerns that some fishing fleets could ignore any restrictions, leading to clashes. These are not unheard of: British and French fishing fleets have engaged in “scallop wars,” in recent years amid disputes over fishing.

Another point of contention has been over what sort of regulations the U.K. will adopt once the transition period is over. The issue is particularly important for the EU, which is worried about being undercut if the U.K. reduces food standards and similar regulations significantly.

— CNBC’s Holly Ellyatt and Silvia Amaro contributed to this article.

UK and EU expected to announce Brexit trade deal today